The big threat to social stability

GRANT PAYMENTS: SHOULD BE A NATIONAL PRIORITY OR IT COULD BECOME A NATIONAL DISASTER

The consequences of non-payment of grants will be devastating, and pose a risk to social stability.

Twenty years in journalism has taught me never to proclaim that something has hit rock bottom. We live in a wonderful country where any website or newspaper can solve any novelist’s writers block, and any ‘the end is nigh’ declaration always seems to come back to haunt you.

But there is an event on the horizon that may plunge SA into a dark abyss from which it could take a very long time to recover.

It is the possible non-payment of around 17 million social grants in April next year.

A lot has been written about SA’s social grants. It represents a major expense to the fiscus, around R150 billion this year. Many argue it’s not sustainable, but in a 40% unemployment scenario these monthly payments are a foundation of social stability. Apart from putting food on the table, these payments sustain economic activity, especially in rural areas.

Post Office

April 1 2018 is D-day. It’s the day the South Africa Social Security Agency (Sassa) takes responsibility for payments from the current service provider, Net1 owned Cash Paymaster Systems (CPS).

On D-day a new entity will have to make the payments, and from last week’s various parliamentary presentations it’s quite evident that Sassa won’t be able to do it.

There was one remark during one of the presentations that sent the longest and coldest shiver down my spine. It was a statement from Minister Jeff Radebe, head of the inter-ministerial committee tasked with fixing this mess. He said, almost matter-of-factly, the Post Office will develop a new IT system to pay the grants. I hope he oversimplified the status of this new payment system as it could take years to develop.

Such a system should be in final testing phase if it’s to be ready in April next year. If not, the non-payment of grants looks like a real possibility.

The consequences will be devastating, and will pose a risk to social stability. It’ll make the current spate of service delivery protests seem like birthday parties.

ANC self-destruct

In some ways, it’s good for democracy to see the ANC in self-destruct mode. It seems inevitable that the ANC will split. But the opportunity cost could be incredibly high. Hopefully some sanity will prevail to declare the Sassa payments contract a national priority before it becomes a national disaster. I’m not too optimistic though, as Jacques Pauw’s book The President’s Keepers clearly shows that the president has several agendas – none of which includes social stability.

Interestingly, the only “out of the box” solution would be for Sassa to acquire Cash Paymaster Systems from Net1, as this system has proven to be world class. This would be a tricky transaction to negotiate because as another Moneyweb colleague remarked ... it will not come at a Black Friday price. But luckily, we have a president that is a negotiator par excellence.